Social Compliance

Social compliance is very subtle programming that people get through reading magazines, listening to the radio, and watching television. People are constantly being programmed to behave in a particular way, and media is often the carrier of this mass programming.

I always think it is funny when you are sitting in a restaurant and the waiter brings you wine to taste. Ideally, etiquette dictates that you take a sip of it, raise one eyebrow like Roger Moor, and say how nice it is.

If you want the whole restaurant to go quiet, the thing to say very loudly is that you know nothing about alcohol, and instead if you could have some tap water.

It is quite funny actually, but the real fact is that unless you are a professional wine taster you will not be able to tell the difference between a $50 bottle of wine and a $1000 bottle. Although most people would like to think that they are 'experts' in wine tasting, they are not.

Keeping up with the idiots...

I used to work for a company where everyone had a performance car. The staff followed an early morning ritual, where everyone looked out of their respective windows to see the other person’s car. Everyone drove a prestige car. People even bought private number plates to hide the year of manufacture of their cars so no one would know that their car was 3 years older.

That was the time when I had just bought land abroad, and I was spending every penny I had towards building a new house on it. Therefore, there was no way I was going to buy a £30,000 car, which would have been worth half of that in less than 4 years.

I always made a point to tell people that I am just like Colombo. I drive an old car and wear an old coat. It is great when people underestimate you. You are also more liable to get a raise and a promotion that way. :-)

My dad always used to say never to buy anything that you cannot fix yourself. My first car was a VW given to me. The great thing about it was that it was free motoring. I only had to buy the insurance, road tax and petrol. I used to service it myself and became an expert at it saving me a fortune in service costs. I drove over 200,000 miles in that car, and when the engine finally gave up, I took it to the scrap yard and asked for £50 for it. Hey, even Sir Alan Sugar would have been proud of me. :-)

Consumer Monopolies and Social compliance

Combining consumer monopoly with social compliance creates one of the most powerful methods to promote a product. A consumer monopoly occurres when a brand becomes so successful that customers only see that and no other. They even ask for the brand by name, and everything else is out of their perception. There is a feedback mechanism in this combination that can cause sales to spiral-up.

Apple was the most successful at achieving this. I have come across people who would be embarrassed to use a phone in public that was not an iPhone. Social compliance dictates that if a person wants to appear cool and successful, they must have an iProduct.

Apple's marketing has managed to combine social compliance with consumer monopoly for every category of product. If you must have an MP3 player, it is cool to have an iPod. All teenagers will expect to possess an iPod and anything else is unacceptable. Peer pressure will ensure that they buy an iPod.

If you are an executive or student, it is cool to have an iPad. If you have anything else, you cannot possibly be a professional. I always ask, what is wrong with a writing pad and a pencil? Has it suddenly gone out of fashion?

It is therefore no surprise that Apple is the number one leader in selling consumer products and one of the largest firms in America.

Superstars and Social Compliance

On an opening night or award ceremony, social compliance dictates that you must wear a designer dress. This must be not just an ordinary designer dress, but it must be a top name, and must cost at least five figures or more.

Why are these dresses getting ever smaller, and yet their cost ever bigger? Hey, if you want a three-piece ribbon set, you can get it cheap on eBay! Why waste money?

Whenever I see a celebrity with one of these dresses, I think of The Emperor's new clothes. Consider that this dress will be worn only once in your life, at this one occasion. Consider that when you sell the dress it will not fetch the same price and will be worth significantly less. Is that a good investment?

This Article Continues...

Warren Buffett
BA-35 Solar Business Analyst
Compound Interest
High Earners
Social Compliance
Buffett-O-Meter: Watch your money grow by-the-second
Some Warren's Tips